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BUSINESS IN BRIEF 26-12Opinions differ over fuel market problems

Authorities reiterated fuel prices had been regulated in a transparent way, but fuel wholesalers disagreed, heard an online meeting on the Government web portal on Thursday.

Nguyen Anh Tuan, deputy director of the Department of Price Management under the Ministry of Finance, said the mechanism for fuel price management was very transparent with clear and specific documents on price components and price stabilization fund.

Deputy Minister of Industry and Trade Nguyen Cam Tu said fuel base prices calculated according to the formula of the Finance Ministry were publicized every day.

“Those who think fuel prices are not transparent, please take a second look at any Thi Truong issue, they are all there,” he said at the meeting.

However, Bui Ngoc Bao, chairman of Petrolimex, the fuel trading company with a 48% market share, expressed a different view. “It’s true that press briefings were held every time fuel prices were adjusted to reveal price components. It was transparent at the time, but it is not in the whole cycle because price components do not comply with any standard,” he said.

In 2012, local prices have not matched global prices as fuel import tax management is for price stabilization purposes. That is to say when global prices pick up, the fuel import tariff is lowered to help bring down local fuel prices.

The fuel import tariff was kept at zero in the first half of the year and price stabilization fund was used to prevent prices from rising. Bao ascribed this to inadequacies in Decision 187, Decree 55 and Decree 84, all of which failed to make provisions for tax.

Tu admitted the State had not collected fuel tax from September last year to September this year.

Tuan said fuel retail prices had been calculated on the average 30-day price. The period is quite long compared to rapid movements from the world’s market. Therefore, he suggested the fuel price calculation period should be reconsidered so that local prices could keep pace with global prices.

The Finance Ministry has proposed a 10-day period. However, such a period will affect circulation and energy security.

“We are studying to make a report to management agencies and perhaps the period will be shortened to 15 days,” said Tuan.

Meanwhile, Tu reminded that the longer the period is, the more weighted the average is, and thus fluctuations are skipped.

He said the trade ministry was more concerned about supply and reserve.

Fuel traders are asked to make reserves for 30 days. Therefore, price management cannot rest on a 10-day basis, he stressed.

He said citizens should know which one is more important between fuel availability and fuel prices. “Management agencies must consider how everyone can easily buy fuel first, and then reasonable prices. It is an equation with multiple unknowns,” he said.

Saigon Paper’s tissue export fares well

Saigon Paper JSC has reported a surge in tissue export orders.

Saigon Paper’s tissue is made by a tissue machine worth US$35 million in the My Xuan 2 paper plant project.

An executive of Saigon Paper said the most recent export order that his firm has won is from an American partner for semi-finished tissue valued at an estimated US$1 million with delivery lasting until end-March 2013. The company had earlier shipped the same product to Britain, Iran, the United States, Australia, Taiwan, Cambodia, South Korea and Kenya with a total volume of over 1,200 tons worth more than US$500,000.

Finished tissue items of Saigon Paper have also reached some other markets, with Japan needing the largest import shipment of 30 containers monthly at present and possibly 50 containers in the near future.

The tissue production line of Saigon Paper came into operation in May 2012. Since then, the output volume of all kinds of such finished tissue products as toilet paper, facial wipes and kitchen papers bound for foreign markets has totaled more than 800 tons worth a combined US$1.3 million. The figure is projected to rise to 900 tons with a value of US$1.5 million at the year’s end.

HCM City breaks ground for new landfill site in Cu Chi District

The Ho Chi Minh City Environment Company on December 21 broke ground for construction of a third waste landfill site at Phuoc Hiep Solid Waste Treatment Complex in Cu Chi District, on the outskirts of the City.

This landfill site will be ready to receive household waste from the City by 2013, after the second landfill site stops operations.

The new 15 hectare landfill site will handle 6.5 million tons of waste for the next nine years with capacity to take in 2,000-2,500 tons of waste each day.

The site will be built with advanced technology from South Korea that will prevent pollution of the environment in surrounding areas.

The total cost of the project is estimated at VND1 trillion (US$48 million). The landfill site is expected to be fully operational by December 2013.

HEPZA to give free Tet bus tickets to workers

The Ho Chi Minh City Export Processing Zone and Industrial Park Authority (HEPZA) said that this year their trade union will give away free bus tickets to 6,000 workers to return to their hometowns in the central and northern provinces to celebrate Tet Lunar New Year.

Workers entitled to these tickets must be members of the trade union, or both husband and wife should be workers, or those workers who have not had the good fortune of going to their hometown during Tet for three consecutive years.

This year again Hepza will continue its program to visit and give presents to 1,500 workers who did not return to their hometown for Tet, or those who were laid off from jobs or those undergoing treatment for diseases at hospitals.

Hepza will also give 50 scholarships to workers to study at universities, increase mobile outlets to sell price subsidized goods and organize selling of Tet bus and train tickets directly at their place of work.

Senior managers of Ethanol Plant absconding, leave huge debts

Senior managers of the Dai Tan Ethanol Plant in Dai Loc District in the central province of Quang Nam are currently absconding, leaving behind huge bank debts and unpaid salaries of workers.

For the last one month, residents from Quang Nam and Kon Tum Provinces have used trucks to block the entrance gate of Dai Tan Ethanol Plant, a unit of Dong Xanh Company, to demand payment of VND21 billion (US$1 million) owed to them.

The Bank for Investment and Development of Vietnam (BIDV) and the Vietnam Technological and Commercial Joint Stock Bank (Techcombank) also sent staff to the plant to protect the ethanol and other products that stood as collaterals to clear bank loans.

According to local residents, the company has not paid them remunerations of upto VND21 billion for materials, food and loading and unloading costs.

The lowest debt amount is VND380 million ($18,000) owed to 30-year-old Mai Van Chi who was a cook for workers at the plant. The biggest debt amount is VND4.5 billion ($216,000) for cassava tubes provided to the company by Pham Thi Ngoc Thanh of Kon Tum Province.

Recently, when residents heard that Techcombank was about to take away ethanol products out of the plant premises to recover debts of upto VND30 billion, they blocked the plant’s entry and exit gates with seven trucks, to prevent anyone from removing movable assets from the plant.

Resident Pham Thi Ngoc Thanh said that liquidation of the plant’s assets must be mutually agreed upon by creditors and concerned authorities of Quang Nam Province.

Dang Hung Tran, deputy chairman of the People’s Committee of Dai Loc District, said they have met with Luu Quang Thai, chairman of Dong Xanh Company, who confirmed that the company had indeed become totally bankrupt.

Thai said that they now owe BIDV VND540 billion ($26 million), Techcombank VND120 billion ($5.76 million), residents VND20 billion and workers VND7 billion ($336,000) in back salaries and insurance fees.

District authorities suggested that Dong Xanh Company and banks first clear debts of residents because this amount is small compared to other debts.

At 2am on December 20, a crowd of at least 100 people gheraoed the plant’s entrance, even threatening to break down the door, so that they could carry away the ethanol at night.

Local residents said they saw tens of people get into 16 seater vans and 50 seater buses to escort 16 tankers from Da Nang to Dai Tan Plant. Several of them were accompanied with uniformed bodyguards carrying canes, electric batons and pepper spray cans.

They blocked the road, demolished trucks, punctured tyres and pushed aside two 3.5 ton trucks, which were blocking the front entrance of the plant.

Later these men burst through the plant’s gate so that their tankers could go inside to transport the ethanol out. At this point, they faced a vicious attack from a group of about 20 residents who had been lying in wait for the last several days in front of the plant.

The bodyguards tussled with residents, which situation turned ugly and Truong Minh Hoa, head of Police in Dai Tan Commune was forced to open fire to put an end to the chaos.

The group of men still pursued and tried to drive their buses straight through the gate but residents held hands to bar them and called out “Police!” after which the bodyguards turned and left.

Soon after the commotion, two of the lighter trucks had their glasses smashed and tyres punctured, and several 80-100cm sections of tree trunks, used for smashing the trucks, were left lying at the scene.

During the night, Dai Loc District Police caught two buses and took 50 men into custody.

Of the 50 people caught, 35 were bodyguards of Phi Vu Security Company based in Go Vap District in Ho Chi Minh City and 15 others were hired men.

Local residents said that Techcombank had hired the bodyguards to transport the ethanol out of the plant.

On December 20, Chu Thi Ngoc Lan, director of Techcombank in Da Nang City, met with the press on this issue. She said that Dong Xanh Company owes her bank VND152 billion and that the ethanol would clear the loan.

The bank had Logistics LA+ Techcombank Company based in Hanoi   to transport the alcohol from the plant. This company then hired Phi Vu Security to protect and escort the cargo.

Marine police bust petrol smuggling case

Vietnam Marine Police Department have uncovered a case of allegedly smuggled petroleum, worth over VND25 billion (USD1.2 million), in Ba Ria – Vung Tau Province.

According to initial investigation, the agency, in coordination with Marine Police Region 3 caught three ships that were allegedly smuggling petroleum on the evening of December 19 off the shores of Ba Ria – Vung Tau.

According to police, a ship named Viet Hai was pumping gasoline into the Viet Hai 1 and Dong Hoa 9.

During the incident, the ship, Viet Hai, contained more than 1,000 cubic metres of 92 octane gasoline.

Upon inspection, each captain failed to produce proper documents for the fuel or its transfer.

According to the captains’ statement, both Viet Hai and Viet Hai 1 belonged to the Viet Hai Corporation, which is headquartered in HCM City.while the Dong Hoa 9 was owned by Dong Nai Trading and Petrol Corporation.

Viet Hai was captained by Nguyen Thanh Tung, Viet Hai 1 by Le Tuan Anh and the Dong Hoa 9 by Ho Sy Bang.

The police have made out a report on the case and towed the ships to the port of the Marine Police Region 3 for further investigation.

 Mekong Delta flower business blooms

It is a bit like selling ice to Eskimos, but that is exactly what flower farmers in the Mekong Delta are managing to do – selling flowers to Da Lat, the country’s most important flower-growing place.

A flower grower in Ben Tre’s Cho Lach District hopes to earn at least VND200 million (US$9,500) this season.

Many floriculturists in Dong Thap and Ben Tre Provinces said they earned much money from selling their flowers to the resort city.

Some kinds of flowers they grow do not grow well in Da Lat, so they have a market there.

Farmers in the renowned Sa Dec flower village in Dong Thap and Cai Mon flower village in Ben Tre said they get higher incomes by growing several Madagascar periwinkle varieties which used to be imported until recently and are popular in Da Lat and elsewhere.

For long, the flower has been grown in Vietnam, but only in two colours. The imported ones were in many other colours, and after they proved popular, farmers began to grow them in the country.

Nguyen Thi Ha, a farmer in Ben Tre’s Cho Lach District who hopes to earn at least VND200 million (US$9,500) this season, said traders from in and around Da Lat buy large quantities of Madagascar periwinkle because people believe the flower brings them luck.

Ha, who has been farming for 15 years in Cai Mon Flower Village, said the flower has become very popular in recent times.

“Last year other farmers and I earned big profits from growing this strain of flower. Several people then began to plant this tree, so the price fell a little bit.

“However, it is the favourite of customers in Da Lat.” Every day she sells more than 200 pots of this flower, which takes only two or three months to bloom.

She has 10,000 pots for Tet (the Lunar New Year), and is sure they would sell out quickly.

Besides Madagascar periwinkle, traders from Da Lat also buy flowers that grow in their own place, and she does not know why.

“I am surprised. I ask [them] why they come to the Mekong Delta to buy flowers, and they say they buy here because they want more beautiful flowers and at cheaper prices.”

Nguyen Huu Thuong, 70, another flower farmer in Cho Lach District, said he is set to send 500 pots of the flower in a variety of colours to Lam Ha District near Da Lat.

Besides Madagascar Periwinkle, Thuong, who grows more than 180 kinds of flowers and trees on his 5,000sq.m farm, also sells several other kinds of flowers to Da Lat traders.

Ha, Thuong, and other farmers here are now growing flowering plants that will bloom during Tet.

Thuong is optimistic that Madagascar periwinkle price will be at least 30 percent higher than last year, when he sold a pot at VND120,000.

Slight December CPI increase in major cities

December consumer price index (CPI) increased slightly in Hanoi and Ho Chi Minh City.

Hanoi’s CPI rose 0.26 percent from the previous month, driving the city’s 2012 CPI up 8.57 percent from 2011.

Out of the 11 commodity baskets measured, only postal and telecom services were unchanged. The cost of transport services saw a decrease of 0.56 percent.

The highest price rise was recorded in garment and textiles, hats and footwear, with a monthly rise of 1.36 percent. The price rise of the remaining baskets, including housing, fuel and construction material; goods and other services; household goods and utensils; culture, entertainment and tourism; medicine and healthcare services; beverages and cigarettes; and food and restaurant services, fluctuated by less than 1 percent.

Meanwhile, in HCM City the index increased 0.17 percent from November.

The biggest price hike was in garment and textiles, hats and footwear, which rose 0.96 percent. It was followed by household goods and utensils, with 0.45 percent. Transport services fell by 0.75 percent. Only postal and telecom services were unchanged.

Big banks and groups to be audited next year

The State Audit of Vietnam (SAV) on December 21 announced its auditing plan for 2013 which will cover major banks and groups.

Next year, the SAV will audit the state-owned Vietnam Commercial Joint Stock Bank for Foreign Trade (Vietcombank), Vietnam Development Bank (VDB), Commercial Joint-Stock Bank of Industry and Trade of Vietnam (VietinBank) and Vietnam Bank for Agricultural and Rural Development (Agribank). It will also audit six state-owned groups and 18 corporations.

Big names on the list are Vietnam National Coal and Mineral Industries Group (Vinacomin), Electricity of Vietnam Group (EVN), Vietnam National Oil and Gas Group (PetroVietnam), Vietnam Posts and Telecommunications Group (VNPT), Song Da Holdings and Urban Development Investment Corporation (UDIC).

The SAV will audit a total of 119 units in 2013, down 42 compared to 2012; however, the value of the firms in next year’s list is bigger.

The 2013 auditing programme will focus on land management and use, real estate, housing and urban development, mineral and natural resource use and business. Issues related to the country’s economic restructuring, particularly projects involving public investment restructure will be paid particular attention to.

Other contents will include transfer pricing of foreign-invested companies and monetary management policies such as interest rates and foreign exchange rate controls as well as solutions to ease difficulties for business activities.

According to the SAV, all groups and commercial joint stock banks will be audited from 2013 to 2015 as part of the restructuring of state-owned enterprises and banks.

Deputy State Auditor General Le Minh Khai said activities by state-owned groups and banks were sensitive, posing risks of corruption and losses to the national budget; therefore, they would be the focus of the auditing plan next year.

The auditing will help to assess financial situation and operational efficiency, particularly the non-core investment efficiency of groups. Based on these assessments, the SAV will propose measures for the restructuring of state-owned enterprises and banks.

New ATM fees to burden cardholders

ATM cardholders will be charged fee for on-us transactions following a new decree by the State Bank.

Currently ATM cardholders are only charged a VND3,000 fee when conducting transactions at ATMs owned by other banks, once the decree takes effect next March, customers will be liable for the charge even when making withdrawals from their bank.

A manager of an ATM card issuing department from a commercial bank said banks considered investment for ATM machine systems based on the issued ATM card number. For instance, the level of 2,000 ATM cards for an ATM machine was suitable to avoid the overloads.

“However, at present, a number of banks want to increase ATM fees for on-us transactions as a way to cover their losses in their business activities,” he admitted.

According to the State Bank of Vietnam, the fee collection is somehow supposed to ‘harmonise’ the benefits between banks and their customers, helping banks to raise funds for investment and improve their ATM service quality.

Nevertheless, many companies and cardholders said that banks have already benefited from the provision of ATM services. Under the current law, ATM users must always leave at least VND50,000 (USD2.38 million) in their accounts. An account with less than VND100,000 (USD4.76) does not allow money withdrawals. Customers will have to pay more fees when they make more transactions.

A managing director of a paper company said his company often paid salaries through their ATM cards for their staff two to three days before the set payment date. Therefore, banks could use this money accrued the bank interest. Additionally, only workers with salaries of a few millions VND per month often withdrew their total salary for one time, meanwhile, thousands of other cardholders left some money in their accounts.

ATM enabled payments has helped simplify procedures for businesses, especially those with thousands of employees.

An accountant at a company in Phu Nhuan District, HCM City, said before ATM payment methods were applied; she had to make a list of receivers, prepared small change and then carefully checked the money before making the payment.

Meanwhile, many workers had to queue to wait for money withdrawals at ATM machines on occasions such as holidays and Tet due to the network being overloaded. For students and poor workers, the ATM fee transactions also added to their financial difficulties.

According an economist, ATM fee applications for on-us transactions would cause difficulties for banks. For instance, after the new fee was imposed, many customers would not withdraw their money via ATM. Instead of this, they would come to banks for direct withdrawals. Due to this, banks would have to arrange more staff members to serve them and spend more on procedures.

Japanese firms pinpoint hindrances in city

Several problems are hindering business and investment activities of Japanese enterprises in HCMC and would badly affect the investment environment and Japanese capital inflow if they were not timely resolved.

At the roundtable meeting between the HCMC government and the Japanese business community held in the city on Wednesday, Japanese firms mainly complained about issues on labor, infrastructure, tax and customs in Vietnam.

HCMC has tried to overcome the current problems, but many of them are left unsolved, said, Mitsuhiro Mori, president of the Japan Business Association of HCMC (JBAH).

“Laws keep changing and new circulars and regulations continue to come out. When they are put into practice, many complex problems emerge, and thus, the demand for revision arises,” he said.

Vietnamese tax law deems it reasonable that advertising and promotion costs are capped at 10% of total expenses. However, it is a very stringent criterion for those looking to do business in Vietnam.

As such, corporate income tax becomes very heavy. JBAH suggested this provision should be revised.

In addition, the regulation that enterprises must report to relevant agencies in advance on any promotional event imposes great burdens and hinders business activities.

Moreover, since 2009, investors that expand their operations have no longer enjoyed corporate income tax incentives. This adversely affects those investors with the desire to further invest in Vietnam.

As for customs, many enterprises complained about the unreasonable requests of customs officers. Besides, customs clearance procedures are time-consuming and cumbersome, said JBAH.

The ban on import of used machines from China also makes Japanese investors worried. Quite a few Japanese enterprises have made plans for shifting their investment from China to other Asian countries, including Vietnam.

Given the import ban, many Japanese firms with production facilities in China have decided to shift their investment to nations other than Vietnam.

Wage hike is another concern of Japanese businesses. According to JBAH, if there was any sudden wage increase in the coming time, Japanese firms would find it hard to maintain their operations in Vietnam.

Therefore, the association proposed Vietnam should practice prudence in minimum wage hike and have a specific roadmap. Specifically, if wage increase was slated for January each year, enterprises could easily calculate expenses and draw up business plans.

Furthermore, the Vietnam Labor Code sets the overtime working ceiling at 200 hours per year, versus 800 hours in China and Thailand.

Employees want to have extra sums, while enterprises want to keep to their production schedules. Therefore, JBAH proposed the maximum amount of overtime working be increased.

Though the problems that Japanese businesses mention are not big, they would severely affect the investment environment if not timely resolved, said Mori.

“JBAH now has 600 members. I hope this number will rise sharply when the investment environment of HMCC is markedly improved,” he said.

In 2012, Japanese investors top the list of investment in HCMC and Vietnam. It is thanks to the roundtable meeting in 2011, said HCMC vice chairman Le Manh Ha.

The roundtable meeting between the HCMC government and the Japanese business community has been organized regularly since 2006. Proposals made at such meetings have greatly contributed to the improvement of the HCMC investment environment.

Sumitomo Life becomes strategic investor of Bao Viet

Japan’s leading life insurer Sumitomo Life on Thursday announced its acquisition of HSBC’s 18% stake in local insurer Bao Viet Holdings for around US$340 million.

Speaking at a strategic investor announcing ceremony in Hanoi on Thursday, Hoang Viet Ha, operation director of Bao Viet Holdings, said HSBC had decided to sell over 122 million shares to Sumitomo Life for nearly VND7.1 trillion after five years of holding.

Peter Wong, HSBC Holdings Plc’s chief executive officer for Asia Pacific, said this transaction represents further progress in the execution of the group’s strategy, allowing HSBC to focus capital and resources on the growth of its core businesses. The sale is expected to complete in the first quarter of 2013.

HSBC paid a total of US$360 million for the 18% stake in Bao Viet in two share transactions with one in 2007 and the other in 2009. The bank earlier this year sold its general insurance business to French insurer AXASA and Australia’s QBE Insurance Group Ltd.

E-commerce transactions account for 2.5% of GDP

E-commerce transactions in Vietnam currently account for 2.5% of the country’s GDP with nearly US$2 billion and is expected to reach US$6 billion in 2015, a trade official said.

Speaking at a meeting on balancing goods supply and demand held in Hanoi on Wednesday, Le Viet Nga, deputy head of the Domestic Market Department, said that among 3,400 surveyed enterprises operating in different sectors, there were up to 60% accepting the Business to Business (B2B) model, with 95% of these enterprises accepting online orders.

Besides, the income earned from e-commerce of one-third of enterprises accounts for over 15% of their total incomes, she added.

The purchase of Vietnamese goods via local e-commerce trading floors is now bustling. However, the management over quality and commercial frauds via online sites is quite loose due to a lack of legal corridors.

Besides, there have been several commercial disputes originating from e-commerce distribution channels, but the role of management agencies is not clear.

The Ministry of Industry and Trade has presented a draft decree on e-commerce to deal with such issues.

Pau Jar promises huge cash gifts for home buyers

Taiwan’s Pau Jar Group has joined throngs of property developers to roll out huge gifts amounting to VND1 billion for customers buying skyvilla apartments at The Flemington in HCMC’s District 11.

Pau Jar is quoting The Flemington luxury apartment project on Le Dai Hanh Street at VND7-8 billion for an apartment measuring some 219 square meters. Customers buying such apartments from now until next January 15 will be given a set of furniture worth VND1 billion, which means they will have to pay only VND6 billion for a VND7-billion home.

Meanwhile, Kien A Company, the investor of the Ventura villa project in District 2, will also give away a gift worth some VND500 million for homebuyers from now until the end of next month. Located in the Cat Lai urban area, Ventura consists of 64 villas which have an area of 119-204 square meters each and are priced at over VND4.6 billion per unit.

Offering direct discounts, paying loan interest for customers, giving furniture and lengthen the payment period are some solutions investors have taken to indirectly lower home prices to attract customers in the current tough market conditions.

According to statistics of the Ministry of Construction, the property market in HCMC has still had around 15,000 unsold apartments worth a combined VND30 trillion.

Views split over IT public investment

There are many different opinions about the present structure of public investment in IT at home.

As per a recent report of the Information Technology (IT) Department under the Ministry of Information and Communications, the Government spent about VND1.25 trillion purchasing IT products last year. The sum included VND351 billion for software and up to VND904 billion for hardware.

There are some saying that the Government is heavily focusing on developing hardware infrastructure and purchasing equipment like desktop computers rather than services and software and the investment is not proportionate.

However, Nguyen Duc Toan, director of EMC Vietnam, a provider of IT infrastructure solutions such as information storage and security, said Vietnam’s structure of investment into the IT industry is suitable.

In the first phase of IT investment, the investment ratio set aside for hardware will be higher than that of software, he said, explaining that infrastructure is always in need of investment first. It is like the traffic industry in which roads will be developed before vehicles are purchased.

“Besides, the fact that whether investment and deployment of software is successful or not depends on suitable process and awareness of users. New software cannot necessarily change the IT system for the better,” Toan said.

He underlined the importance of taking a long time to change the industry for the better. Previously, software projects were for addressing micro issues, but lately software schemes with considerable impacts like public financial projects have also started.

Toan asserted the current IT public investment is not misleading. Statistics of Gartner indicate an investment ratio of 18% for software is the common structure for IT investment in many other countries but the figure of VND351 billion out of a total VND1.25 trillion is not small, he clarified.

“Moreover, when looking at the overall IT investment picture, we can see that a lot of public services have become much more convenient compared to a decade ago thanks to IT investment,” he added.

Regarding the issue, Deputy Minister of Information and Communications Nguyen Minh Hong agreed that public opinion tends to pay attention to the investment ratio between hardware, software and services in comparison with the total investment value. However, Hong said the ministry will adjust the ratios in accordance with reality in every specific development period.

China Steel Sumikin’s $1.1bln project close to completion

A $1.15 billion integrated steel factory in southern Ba Ria-Vung Tau province, backed by a joint venture led by Taiwan’s China Steel Corporation, is in its final stages of pre-production and could start making steel in spring 2013.

A source from Ba Ria-Vung Tau Provincial Industrial Zones Management Authority told VIR that the investor, China Steel Sumikin Company, had already completed the factory construction and was in the process of installing equipment and machines.

“The factory could go into commercial operation in May 2013,” said the source.

Located in Ba Ria-Vung Tau’s My Xuan A2 Industrial Park, China Steel Sumikin’s project will be among the largest steel factories in Vietnam, capable of producing 1.6 million tonnes of steel each year. This is a joint venture led by Taiwan’s largest steel maker, China Steel Corporation, which hold 51 per cent of the stakes. Other shareholders include Japan’s largest steel maker Nippon Steel & Sumitomo Metal Group, Chun Yuan Steel Corporation, Hsin Kuang Steel Corporation and Formosa Ha Tinh Steel Corporation.

The factory’s products include hot rolled steel plates, pickled and oiled steel sheets, cold rolled steel sheets, hot-dip galvanised steel sheets, and electrical steel sheets for shipping industry, automobiles, motorcycles, electric and electronic products.

China Steel Sumikin’s project was initially licenced in 2009, and construction began in September 2011.

“Once the new facility starts working, it will create jobs for about 1,200 people,” the source said.

China Steel Sumikin is the largest overseas investment project of China Steel Corporation and also the largest investment of this steel maker in Vietnam. Speaking at the ground breaking ceremony of the project last year, J.C. Tsou, chairman of China Steel Corporation said this project set a strong foothold for the firm to penetrate into the growing automobile and electronic appliance markets in South East Asia region.

Once operating, China Steel Sumikin will also support for the manufacturing industry of Vietnam. Even though Vietnam is facing a glut of construction steel, the nation still has to import a large volume of steel serving for automotive and shipbuilding industries.

Pham Chi Cuong, chairman of the Vietnam Steel Association, said the operation of integrated steel factories like China Steel Sumikin would be very important for Vietnam’s industrial sector because they could ensure the supply of special steel products while reducing steel imports into the country.

Apart from China Steel Sumikin, other integrated steel factories are expected to start operations in Vietnam in the coming years. Formosa Plastics Group early this month started constructing the first blast furnace of its $10 billion steel and seaport complex in central Ha Tinh province, in which China Steel Corporation also holds a 5 per cent of the stakes.

Nokia on schedule despite struggles

Nokia has kept construction of its $302 million manufacturing facility in Vietnam on schedule to start production next year, despite the company’s well-documented financial setbacks.

William Hamilton-Whyte, managing director of Nokia’s representative office in Vietnam, said even though the mobile phone maker faced financial difficulties, the company’s investment plan in Vietnam remained on schedule and capable of creating 10,000 jobs at its facility under construction in northern Bac Ninh province.

“It is still being built here. It is not behind the schedule. We are building foundations, walls and roofs of the facility. But you will see that it goes fast because Nokia wants to build it like facilities we did in Finland, India or China,” he said.

Nokia began the construction of this $302 million facility in April and planned to complete the construction in 2013. The factory has a production capacity of 45 million units per quarter. Most of the products will be exported to overseas markets.

Nokia is building the facility in Vietnam amid the financial trouble that forced the firm to announce closure of its facilities in Germany, Canada and Finland. As a result of the planned changes announced, Nokia plans to reduce up to 10,000 positions globally by the end of 2013.

By building manufacturing facility in Vietnam, Nokia could reduce production costs through taking the advantages of affordable labour cost and preferred tax incentives in this country.

In Vietnam, Nokia is recognised as a high-tech enterprise, meaning that Nokia will have an equal competitive advantage with its rival Samsung Electronics in term of tax incentives, which include 10 per cent of corporate income tax for the whole life of its project. A high-tech enterprise also enjoys tax exemption for its first four years of operation with profits and pays half of this 10 per cent rate in the following nine years.

“I am very eager to get the first product from the facility in Vietnam,” he said, adding that it would have a huge impact on Nokia’s business in Vietnamese market as it “enables us to be closer to customers.”

In a bid to expand its market share of smartphones in Vietnam, where Whyte said it was growing month-on-month, Nokia last week officially announced plans to sell its best smartphones Nokia Lumia 920 and Nokia Lumia 820 in the market, and introduce a new device running Windows Phone 8 called Nokia Lumia 620.

JICA helps Danang build water treatment plant

Japan International Cooperation Agency (JICA) approved a $2 million funding for a study on the building of the Hoa Lien Water Treatment Plant in the form of Public-Private Partnership.

PPP is a cooperative model that JICA has strongly preferred to attract Japanese investors to Vietnam, the chief representative of JICA in Vietnam has revealed.

At a working session with Danang city’s authorities on December 20, a representative of the Asian Development Bank (ADB) said that Da Nang City can choose the optical plan to launch the project or use the financial assistance sourced from ADB or that between ADB and Japanese private investors.

With the PPP form, the city can take advantage of private investors’ loans and Japanese investors’ capacity.

The Hoa Lien Water Treatment Plant project benefits from the ADB’s credit program designed for Vietnam in the phase from 2010-2020 with a total value of $1 billion.

S.mart to strike back for local retailers

C.T Group, one of largest property developers in Vietnam, is planning to open 20 supermarkets in the near future.

The supermarket chain will be named S.Mart and managed by R.H Group, a C.T Group member company which has 20 years retail industry experience.

A R.H Group representative said the plan would not only create more profits for enterprises, but also enhance the position of local retailers which is gradually being dominating by foreign ones such as Big C, Metro and Lotte that are expanding with a series of large-scale retail developments.

R.H Group would corporate with other domestic retailers to target mid-high income earners in Vietnam.

The first S.Mart supermarket is expected to be opened by the end of this month at No.240 Tran Binh Trong, in Ho Chi Minh City.

The 3,000 square metre supermarket will serve 20,000 different goods including fresh food, technology, cosmetic, household appliances and fashion. Especially, the building will also offer restaurants and services such as a spa and household appliance repairs.

HCM City, French Alps form bonds

Officials of the French region of Rhone-Alpes are encouraging Vietnamese businesses to invest in renewable energy, green technology and environmentally friendly works.

Speaking at a seminar in HCM city this week, Bernard Soulage, vice president of the regional council of Rhone-Alpes, said the region also wanted to work with other Vietnamese industries, including tourism and bio-technology.

Soulage said he was impressed with HCM City’s development. “The city is a reliable partner in sustainable development,” he added.

He noted that during the Vietnamese – French Friendship Year and the 40th anniversary of the establishment of the two countries’ diplomatic ties in 2012, there will be a series of events and exchange activities that will be held.

Nguyen Huu Tin, deputy chairman of the city’s People’s Committee said the two sides had worked on urban planning and the environment.

HCM City is a driver behind the country’s economic growth, with GDP increasing by 8.7 per cent for the first nine months of the year, 1.8 times higher than the nation’s GDP.

FDI projects in HCM City account for one-third of the total of the country’s FDI projects.

“The sustainable development of HCM City is based on internal forces but also on forces from outside,” he said. “Therefore, we attach much importance to cooperation with foreign countries, including France and the Rhone-Alpes region in particular.”

The two countries plan to create a strategic-partner cooperation next year.

By the end of November this year, bilateral trade between HCM City and France reached US$658 million.

France also has 122 investment projects in HCM City worth $763 million, and ranks as one of the 10 biggest foreign investors in the city.

The number of French tourists has increased yearly. In 2011, the city welcomed more than 100,000 French tourists.

Aymeric PONS, director of the Enterprise Rhone-Alpes International (ERAI)’s representative office in Viet Nam, said the ERAI, created in 1987 at the initiative of the Rhone-Alpes regional council, was the region’s spearhead for international economic development.

It promotes and supports the development of Rhone-Alpes’ companies in international markets and helps foreign businesses that invest in France.

VN-France trade may top $3b

Bilateral trade value between Viet Nam and France was estimated to reach over US$3 billion this year, with about $2 billion exported to France, according to domestic customs data.

About $600 million worth of goods originating from Viet Nam entered France through intermediate countries, Viet Nam’s trade agency in France said.

The agency said that the outlook was promising for trade relations between the two sides, as the majority of domestic products were essential consumer goods, which were both increasing in quantity and improving in quality.

The Ministry of Industry and Trade said that both parties were actively negotiating a Viet Nam – European Union (EU) free trade agreement, one of Viet Nam’s major foreign trade goals.

Such an agreement would bring about new opportunities for the development of trade and investment relations between Viet Nam and the EU, particularly with France.

Companies from both countries could boost cooperation in such areas as garments and textiles, footwear, wooden furniture and food processing, experts said.

The experts were speaking at a recent seminar jointly held by the trade agency and the VCL-France business club in Neuilly sur Seine, which aimed to introduce French businesses to Viet Nam’s foreign trade strategies until 2020.

Ministry ponders tax delays, cuts

Tax delays and corporate income tax reductions are among the major measures proposed by the Ministry of Finance to alleviate difficulties for businesses next year.

The ministry suggests setting a 10 per cent corporate income tax from July 1 2013, six months earlier than initially planned. This will also be applied to investors working on social housing–apartment projects for low income people.

The businesses dealing with social houses and apartments (of below 70sq.m which are sold at less than 15 million per sq.m) will enjoy value added tax reductions of 50 and 30 per cent respectively. The regulation will be applicable from July 1, 2013 to June 30, 2014.

For the next two years, the ministry also recommends halving land lease payments for businesses, households and individuals who rent State land.

Construction investors who fail to pay land leases due to financial difficulties can make payments according to their sales income. However, they are allowed to delay payment for a maximum period of 24 months if tax institutions receive notification.

The ministry also proposes a six month extension for next year’s first quarter corporate income tax payments, as well as three months for the second and third quarters. This regulation targets small and medium-sized enterprises which employ less than 200 full time workers and whose revenues do not exceed VND20 billion (US$900,000) per year.

Enterprises with more than 300 employees and who are specialising in forestry, agricultural and seafood products, garment production, shoes, electronic parts and infrastructure construction will also be subject to delayed income tax payment. Property investors and dealers will also be granted the extension.

Tax payment extension will not apply to businesses which are subject to special income tax, for example financial institutions, banks, insurance companies, stock markets and lotteries.

Gov’t fiscal policies must spark confidence in 2013

The government’s new economic policies for next year need to focus on inspiring confidence of both consumers and businesses.

The recommendation was made by Tran Du Lich, a member of the National Advisory Council on Monetary and Financial Policies, said on Thursday during the Viet Nam Investment and Trade Promotion Forum in HCM City.

The forum was organised by the HCM City Union of Business Associations (HUBA) in collaboration with the Union of Friendship Organisations and HCM City Business Development Company.

The forum was attended by consul generals, commercial affairs officers and representatives of provincial businesses associations and 200 companies.

He said that market confidence had fallen this year due to frequent change in policies. As a result, businesses are unable to respond quickly to changing conditions.

To regain market confidence, the Government has addressed several problems, such as an inventory of businesses, bad debts at banks and a frozen real estate market.

By the end of this month, the Government will map out some solutions and policies to deal with problems.

However, Lich noted that, to recover the market, the efforts of enterprises would also be needed as well as State intervention.

Huynh Van Minh, chairman of the HCM City Union of Business Associations (HUBA), said that next year would continue to be challenging for businesses “due to the corollaries of economic crisis”.

He said that businesses must establish close linkages and be more creative in responding to the economic crisis. Together with support policies from the Government, businesses would more likely overcome difficulties, he added.

It is estimated that by the end of the year, about 200,000 enterprises will have stopped operating or will have been dissolved.

Many enterprises have had to reduce their production scale because of tighter credit and high inflation.

Le Ngoc Trung, deputy head of the Ministry of Industry and Trade’s representative office in HCM City, said next year the government should help resolve the capital shortage for businesses and strengthen investment and trade promotion activities in new markets.

Although interest rates have dropped, businesses are still having a tough time accessing capital.

Trung advised companies to diversify capital sources, and not just depend on bank loans to do business.

“Economic restructuring to stabilise the macro-economy is just in the beginning period and will continue to be implemented next year,” he said.

To attract more FDI, Phung Anh Tuan, Honorary General Consul of Finland, suggested that the Government issue the operating licence first and the investment licence later.

Currently, both licenses are issued at the same time, which results in a long waiting time, disappointing foreign businesses, he said.

Tuan said that Myanmar and Indonesia in the last two years had become more desirable locations for FDI than Viet Nam because of significant changes to those countries’economies and their favourable investment policies.

But Tran Kim Chung, chairman of CT Group, said FDI in Viet Nam was forecast to increase next year, with several big foreign-invested projects in central Ha Tinh, Khanh Hoa and Binh Dinh provinces.

As of November, southern Binh Duong Province ranked first in the country this year in attracting FDI ($2.2 billion), followed by HCM City ($1.14 billion) and southern Dong Nai Province ($1.115 billion).

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

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